Shares in the spin-off of South African e-commerce group Naspers surged more than 25% in the first minutes of their market debut in Amsterdam yesterday.
Prosus comprises Naspers’ global empire of consumer Internet assets, with the jewel in the crown a 31% stake in Chinese tech titan Tencent.
There is “way more demand than is even available, so that’s good,” said the CEO of Euronext Amsterdam, Maurice van Tilburg. “It’s going to be an interesting hour of trade after opening this morning.”
Euronext had given an indicative price of €58.70 per share for Prosus, implying a market value of €95.3bn ($105bn).
The shares jumped to €76 on opening and were trading at €75 at 0719 GMT.
The spin-off in Amsterdam marks the end of an era for Naspers as it looks to move beyond the legacy of former chief executive Koos Bekker’s prescient investment of just $34mn in Tencent when it was a startup in 2001, one of the most lucrative bets in corporate history.
The stake in Tencent, the world’s biggest videogame company and home to China’s hugely popular WeChat social media platform, is now worth $130bn and has buttressed Naspers’ rapid growth towards becoming Africa’s most valuable listed company.
That would make Prosus the third-largest stock on the Amsterdam exchange after Shell and Unilever, and Europe’s No 2 tech firm after Germany’s SAP.
European players are still, however, dwarfed by the likes of Facebook and Amazon in the United States.
The Tencent stake has been worth more than Naspers itself for years, and dominated the $103bn group’s finances.
One motivation for spinning off Prosus is to narrow that value gap.
The Prosus listing should see about a quarter of Naspers’ value move to Amsterdam.
“We believe Prosus will present a new and attractive opportunity for global tech investors to access our unique portfolio of Internet businesses, providing a strong foundation for our future growth plans,” said Naspers’ CEO Bob van Dijk.
“The listing is also designed to reduce our weighting on the Johannesburg Stock Exchange, which we believe will maximise shareholder value over time.”
Naspers will retain a stake of about 25% in Prosus, with the other 25% distributed to Naspers shareholders and making up the free float.
Prosus also has stakes in fast-growing food delivery, social media and payments companies in China, India, Brazil and Russia. In the food and delivery sector, it owns stakes in Delivery Hero, Takeaway.com, Latin America’s iFood, and India’s Swiggy.
For the fiscal year ended in March 2019, Prosus reported a 15% rise in revenue to $2.65bn, and its operating loss narrowed to $418mn from $615mn.
Prosus accounts for its Tencent stake as an “equity accounted investment”, which added $3.41bn to 2019 pre-tax profit.
Prosus’ net profit ended up being $4.25bn, thanks to a $1.6bn windfall on its sale of a 10% stake in Flipkart to Walmart.
Jasper Jansen, an analyst at the Dutch shareholders’ rights group VEB, said he welcomed the listing of Prosus.
“We love the fresh blood – finally there’s a real company listing here that’s active in the new economy,” he said.
However, he criticised Naspers’ decision to maintain a two-class share structure system which gives its biggest shareholders extra voting rights in some circumstances.
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